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August 27, 2014

US credit card late payments dips in Q2

The US credit card delinquency rate has declined to its lowest level in at least seven years, decreasing from 1.27% in the second quarter of 2013 to 1.16% in the second quarter of 2014, according to credit reporting agency TransUnion.

By Verdict Staff

The US credit card delinquency rate has declined to its lowest level in at least seven years, decreasing from 1.27% in the second quarter of 2013 to 1.16% in the second quarter of 2014, according to credit reporting agency TransUnion.

According to the latest TransUnion Industry Insights Report, which noted that the credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) dropped nearly 9% in the last year while falling more than 15% in the last quarter (from 1.37% in the first quarter of 2014).

Average credit card debt per borrower remained almost unchanged in the last year, increasing slightly from $5,226 in the second quarter of 2013 to $5,234 in the second quarter of 2014. On a quarterly basis, credit card debt increased from $5,164 in the first quarter of 2014.

Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit, said: "Consumers continue to have a good handle on their credit cards, with delinquencies at all-time lows across the spectrum. We observed that delinquency rates are dropping for all age groups, and at relatively similar rates.

"Traditionally, consumers carry heavier debt loads between the ages of 40 and 60 as they are in their peak purchasing years. They also tend to spend more on items such as new cars, home furnishings, college tuition for their children, etc. As we’ve noted in recent quarters, younger consumers continue to have lower debt levels — which can be attributed in part to limited access to card credit and a greater reliance on debit cards, among other factors."

TransUnion reported 349.79 million credit card accounts as of the second quarter of 2014, up from 332.26 million in the second quarter of 2013.

TransUnion’s latest credit card report also found that the non-prime population (those consumers with a VantageScore 2.0 credit score lower than 700) represents a larger portion of all new credit card loans at 31.2% in the first quarter of 2014, up from 27.3% in the same period last year.

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